Women and young Australians are set to be hardest hit by the Fair Work Commission decision to reduce Sunday penalty rates in varying amounts for workers in retail and hospitality with the exception of restaurants. Bianca Hartge-Hazelman from Financy looks at the economic implications.
Growth in the number of women working part-time has been helping to prop up the economy, but could that change by a decision to reduce Sunday penalty rates for retail and hospitality industries?
Many business groups are all for the cuts to wages, and argue it will help them to create more jobs and that this will be good for economic growth.
But women working part-time, and others affected say Sunday’s just got less attractive, and they’re unlikely to work it.
“I work every Sunday because I get paid more for it and we don’t have to pay out extra on childcare as hubby can stay home with the kids,” one mother told Financy.
“It’s unlikely I’ll want to do this shift in future, I’d rather be with my family.”
The latest jobs data shows while overall national jobs growth was reasonable, the number of full time jobs fell by 44,800 in January, but part time jobs rose by 58,300.
If part-time jobs growth accelerates this could lead to a rise in interest rates. But if by chance it declines and fails to prop up the number of full time jobs, this may strengthen the case for another rate cut this year.
“Lower wages and less employment would be a big negative if it happened, but I can’t see why it will,” says AMP Capital Dr Shane Oliver.
“If the cost of employing people on Sundays and public holidays goes down the more likely response is that employers in such industries will employ more people. I have heard lots of stories about cafes on Sundays being flat out but cant employ more people because of the penalty rates.”
“If perchance the supply of such workers, many of whom are women, goes down because of the lower pay then all that will happen is that employers will have to maintain wages otherwise they won’t be able to run their business,” he said.
Female participation in part-time employment has been growing in recent years.
Women constitute 71.6 per cent of all part-time employees, according to the Workplace Gender Equality Agency.
This is largely because of the flexibility it provides many working mothers, and the attractive penalty rates also allow them to catch up on lost pay.
In 2016, the gender pay gap in the retail trade industry sat around 16 per cent and across all industries, for those employed full-time it sat at 23 per cent.
But part-time work, particularly that on Sundays, is arguably about to lose its appeal and serious questions need to be asked about not just the gender impact of this Fair Work decision but the potentially impact on the economy if it fails to create more jobs.
This rise in employment in January has been closely watched by economists as they analyse it in comparison to slow wages growth and higher house prices, when making calls on the direction of interest rates.
“Solid jobs growth and unemployment remaining well down from its recent highs supports the argument for the Reserve Bank of Australia (RBA) to keep interest rates on hold, but the ongoing weakness in full time jobs supports the case for another rate cut to the extent it points to continued weakness in wages growth and hence in inflation,” says Mr Oliver.
The official cash rate stands at 1.5 per cent – an historic low, reflecting economic weakness in Australia.
Industry groups including the Australian Chamber of Commerce and Industry claim that the cut in Sunday penalty rates will create more jobs at time when 725,000 people including 259,000 young people are out of work, reports Fairfax Media.
In handing down it’s decision this week, the Commission said its decision would “inevitably cause hardship” to employees who include among the lowest paid in the country.